Obamacare: What's going right. What's going wrong

Insurers are dropping out of Obamacare. Insurers are sticking with Obamacare. Premiums will soar once again. Insurers are seeing costs stabilize.

The headlines about Obamacare’s health these days are very confusing — and we’re not even talking about what’s happening on Capitol Hill. While Republican lawmakers argue over how to repeal and replace the law, insurers are trying to prepare for 2018. Some are doing better than others.

What’s going right

Many, though not all, insurers have finally figured out how much to charge for coverage on the exchanges, said Paul Lambdin, who leads Deloitte Consulting’s exchange practice for health plans. They are now on firmer footing after instituting big rate hikes for this year.

“We’ve largely stopped the financial hemorrhaging,” he said. Obamacare “is not the type of financial drain it has been.”

Many of the larger Blue Cross Blue Shield plans, which specialize in the individual market, expect to break even this year, Lambdin said. And while premiums will rise for the coming year, as they always do, he expects the increases to be lower than they were for this year on balance.

Anthem(ANTX), a big publicly-traded Blue Cross plan, said last month that its Obamacare business was doing “significantly better” than last year, though claims still ran slightly higher than expected. The company has projected that its individual market segment will break even or be slightly profitable in 2017, after being in the red last year.

Meanwhile, BlueCross BlueShield of Tennessee has also seen its performance improve this year, after losing more than $400 million since 2014. The company agreed this week to sell Obamacare policies in the Knoxville-area in 2018 so that residents there would have at least one insurer on the exchange. Their only carrier this year, Humana, (HUM)announced in February that it was puling out of the individual market completely.

What’s going wrong

Obamacare remains very troubled for some insurers and in some regions of the country. Several insurers are still being swamped by policyholders who are sicker and costlier than expected.

Also, they are not happy about all the uncertainty in Washington. Trump officials and House Republicans have yet to settle a lawsuit left over from the Obama administration concerning the cost-sharing subsides the government pays insurers to reduce out-of-pocket costs for lower-income enrollees. President Trump has sent conflicting messages over whether he’ll continue to fund the subsidies until the two sides come to an agreement.

Also, insurers are nervous that the Trump administration and Congress will weaken or eliminate the individual mandate, which requires nearly all Americans to have coverage or pay a penalty. The mandate also lures younger, healthier people to sign up for policies. Insurers depend on these folks to offset the costs of older, sicker customers.

These worries are on top of all the uncertainty over the Republican effort to repeal and replace Obamacare in Congress. The House bill, which senators are now looking to overhaul, would radically change the individual market. Just a few of insurers’ concerns: eliminating the individual mandate and cost-sharing subsidies, as well as replacing Obamacare subsidies with tax credits that are less generous for many Americans.

Two major insurance industry lobbying groups, along with organizations representing doctors, hospitals and patients, have expressed serious concerns about the bill. Among their worries is the legislation will render insurance unaffordable for millions.

Some insurers aren’t waiting around to see what happens. Aetna(AET) announced it is pulling out of the four states it is currently in. The insurer says it expects to lose more than $200 million this year, on top of the nearly $700 million it lost in Obamacare’s first three years.

Wellmark is exiting Iowa, saying political uncertainty is making it hard to do business. Several other carriers have warned that are also reconsidering their involvement.

Some insurers that are sticking around are requesting another round of big rate hikes. They say they have to price in both sicker-than-expected patients and the changes the Trump administration and Congress may make.

CareFirst BlueCross BlueShield, for example, wants to raise premiums by 52% in Maryland, 35% in Virginia, and 29% in Washington, D.C. In Virginia, Cigna(CI) wants to raise rates by an average of 45%, while HealthKeepers, an affiliate of Anthem Blue Cross and Blue Shield, is looking for an 38% increase.

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